The Budget Debate: The 60% Solution

November 4, 2013

Robert Borosage

Washington is girding for another bruising budget crisis. Agreement is needed for funding the government by mid-January to avoid another shutdown. The debt ceiling must be lifted by February to avoid default. The last shutdown ended only with an agreement on the date for the next manufactured crisis.

In strategy meetings, advocates for workers and the poor wring their hands. Their fears are many. The Republicans, led by House Budget Chair Paul Ryan, oppose any tax hikes or loophole closings. They want to roll back the cuts in the military and extract them from domestic programs. They’ll only consider getting rid of the destructive and mindless across-the board sequestration cuts if they are “paid for” two or three times over by cuts in Social Security, Medicare, Medicaid and other security programs. Food stamps are under assault. Meanwhile, the Pete Peterson funded plutocrats’ lobby is ginning up the call for cutting Medicare and Social Security. The president put cuts in Social Security – the cutting back on the annual adjustment for inflation – in his original budget for this year. The entire debate is about what and how to cut, not about what to do about an economy plagued with low growth and continued high unemployment, and closer to recession than to real recovery.

Time out. Before we drown in our own fears, a sober look is needed. These repeated budget crisis are destructive, but the political reality has changed now. Republicans are weak, not strong, and are divided, not united. And their position is incredibly unpopular. Republicans can’t afford to force another government shutdown. And they will pay a big price if the public gets a clear sense of what they propose to do.

Mitch Gives the Game Away

The Tea Party driven government shutdown drove Republicans to record lows in public regard. They took aim at Obamacare and shot themselves instead. Like a Dick Cheney hunting party, the wounds were self-inflicted.

The business lobby sounded the alarm. New efforts were launched to fund sensible establishment conservatives and defend legislators under attack by Tea Party. The old guard of the Grand Old Party roused itself in dismay.

Republican Senate leader Mitch McConnell, despite facing a Tea Party primary challenger himself, sounded the retreat. He scurried down to a Republican Senate Campaign Committee fundraising retreat with 300 or so major donors in Sea Island, Georgia to address what he called “the elephant in the room,” and promised that Republicans will not support another government shutdown or come close to defaulting on the nation’s debts. The shutdown strategy, he announced, wasn’t “conservative policy,” and “could not and would not work.”

McConnell gave the game away. Most Republicans understand that it will be political poison to hold the nation hostage one more. They need an agreement. Despite all the hardball posturing headed into negotiations, they are deeply divided – and desperate to avoid doing more damage to themselves. They already blinked before the negotiations even opened.

Ryan: No Place to Hide

Rep. Paul Ryan, the House Budget Committee Chair, began the budget conference by declaring that Republicans would not consider raising even a dime in revenue by closing loopholes on billionaires or shutting down overseas tax dodges used by multinational corporations. Austerity, not jobs, was on the agenda. Deficits could be reduced only by cutting spending. And rather than harsh cuts on the military, Congress should focus what he called “smart cuts” – that is slashing Medicare, Medicaid and Social Security.

Of course, he didn’t phrase it quite that clearly. He said that “Taking more from hardworking families just isn’t the answer….So I want to say this from the get go: If this conference becomes an argument about taxes, we’re not going to get anywhere.” Instead, Ryan suggested “Let’s focus our energy on the task at hand: a budget that cuts spending in a smarter way.” And that means, as he explained in a Wall Street Journal op-ed, “We could provide relief from the discretionary spending levels in the Budget Control Act in exchange for structural reforms to entitlement programs.” Or in English, avoid the immediate cuts facing the military by substituting cuts in Social Security, Medicare and Medicaid, the leading “entitlements.”

Billionaires pay lower tax rates than their secretaries. Corporations like GE ship jobs and stash profits abroad and pay zero – nada –in taxes. Yet, Republicans argue that not one penny should be raised from the wealthy and the corporations to reduce the deficit, to substitute for the mindless sequestration cuts or to pay for vital investments in infrastructure and education. Instead, Republicans insist on cutting the security promises vital to “hardworking families” — Social Security, Medicare and Medicaid. Democrats would benefit from an extended public argument on this proposition so as many voters as possible get a good sense of what the Republican position actually is.

Republicans have no stomach for another shutdown or threatened default. They need an agreement. But their terms for an agreement are incredibly unpopular. Democrats have every reason to put out a clear alternative position and hang tough.

The 60% Solution

Democrats should urge Republicans to join with the vast majority of Americans on a set of common sense propositions.

Democrats should demand that the debilitating sequestration cuts be repealed. The deficit is already falling faster than intended or wise. The added sequestration cuts make no distinction between the vital and the wasteful, and have already cost jobs. More sequestration cuts will harm basic programs and cost hundreds of thousands of jobs that we can’t afford to lose.

Democrats should stand united as the defenders of Medicare, Medicaid, and Social Security, and programs for the vulnerable. These may need reform, but they not be carved up as part of deficit reduction.

And they should join the president in arguing for making investments vital to the economy – in infrastructure, education, research and development, pre-k, new energy. We need jobs and growth, so we should be investing in areas that are essential to rebuilding the economy. We can pay for these investments by clamping down on corporate tax dodges, eliminating all the subsidies corporations gain by moving jobs or reporting profits abroad.

If Republicans demand that any relief from the harmful sequestration cuts be paid for, Democrats should stand with the vast majority of Americans and insist on what might be called the 60% Solution, since 60% of Americans or more agree on the position.

And as has been consistently true over the past years, Gallup finds that

66% say that corporations pay too little in taxes

61% say that the wealthy pay too little in taxes.

(And 52% think government should “redistribute by heavy taxes on the rich”)

Air the Laundry

The budget committee negotiations have quickly turned into closed-door, back room discussions between the committee chairs and key staffers. Public sessions are to be at a minimum as the chairs press to “get something done” by mid-December.

But Americans are badly served by closed-door deliberations. Deeply unpopular positions get baked into compromises that are sold as bipartisan solutions. Only the experts know who stood for what. When the parties want to do something they know Americans oppose, they head for the closed door and the back room.

We’d be more likely to reach a good agreement with an open process.

Democrats should lay out the 60% solution. No cuts in Medicare, Medicaid, Social Security or food programs for the poor. Period. Repeal the sequester. Period. Invest in areas vital to jobs and growth. If ending the mindless sequestration cuts has to be paid for, close the loopholes on billionaires and shut down the tax breaks that benefit corporations that move jobs or report profits abroad

Object to any plan that suggests that the debts run up by the economic collapse caused by Wall Street’s wilding should be paid by “hardworking families.”

Let Republicans storm about taxes. Let them call for cuts in Social Security and Medicare. Let them walk out of the talks, and posture tough. Keep demanding the 60% solution all the way through the holidays. Warn them that the last shutdown did real damage to the economy and to real people, and Americans can’t afford another shutdown.

Fact is the more Americans get a whiff of their position, the more their popular support will plummet.

And then when the deal is finally cut in January – and there will be a deal — the Democratic position will be far stronger. There will be no-nonsense about “paying for ending the sequestration cuts” by cuts twice or three times as deep in Medicare. There will be no-nonsense about freeing the military from cuts at the cost of deeper cuts in domestic programs like child nutrition and education.

There will be a deal. It won’t be great. Without far more pressure from the American people for jobs, it will continue the austerity policies that are slowing our recovery, and contributing to scarce jobs and stagnant incomes. Any plausible agreement will do more damage than good to the economy.

But the deal can make it clear who stands for what. It can make it clear which party stands in the way of a better economy. Republicans stand with the 1%. Democrats should be clear that they are on the side of the rest.

Recent Stories by Robert Borosage

Democrats can use their new leverage in Washington to expose how big money has used the Trump administration to rig the rules in ways that hurt working people, and show ways that in key areas - education, the environment, and criminal justice - there is an alternative.

About Robert Borosage

Robert L. Borosage is a senior advisor to People's Action and writes widely on political, economic and national security issues. He is a Contributing Editor at The Nation magazine, and his articles have appeared in The American Prospect, The Washington Post, the New York Times and the Philadelphia Inquirer.